Let’s face it, we all work hard to make and save money. What if I told you that salary packaging could help you save more money?
If you’re employed and earn enough to pay tax, you’re the ideal candidate for salary packaging. There are several items you can salary package to significantly reduce the amount of tax you pay – and take home more money.
How Does Salary Packaging Work?
Salary packaging, or salary sacrifice, allows you to pay for everyday benefits using your pre-tax salary, thereby reducing your taxable income. You can also make further GST savings on the items you package.
Any employee can salary package, regardless of your salary or industry – and with any provider. The provider engaged will work with your employer, acting as an agent in managing your packaging plan.
Usually, salary packaging is of no cost to the employer, with the management fees covered by the employee. At Pay@bility, we only charge is 15% of what we save you. If we cannot save you money, then we don’t charge anything. This creates a win-win situation for both the employee and the employer. The employee increases their take-home pay, while the employer can offer staff an additional perk, or benefit item, at no cost and with little effort.
At Pay@bility, our aim is to make salary packaging easy. We have developed a revolutionary system that takes the complexity out of salary packaging and empowers employees to control their packaging plan at the click of a button.
We work with the employer to define the benefits to be packaged and how the GST will be treated. Because the benefit is regarded as an employer expense, the GST is claimed back from the ATO and the employer pays this directly to the salary packaging company for return to the employee.
The salary packaging provider must ensure that there is correct proof of the expense being salary packaged and that it is prospective. Our unique system enables employees to custom-design their own packaging plan and then monitor transactions in real-time.
What are the Most Popular Salary Packaging Items?
Cars are the most popular – and usually the most lucrative – salary packaging item. Not only does the ATO allow you to salary package your vehicle, paying for part of the running costs pre-tax, but you also save the GST on both the purchase price and running costs, including fuel, servicing and parts.
And if your partner or spouse has a car, that too can be packaged through your plan.
Another obvious benefit item is your mobile phone. If it’s primarily intended for business, which does not need to be greater than 50% of total use, then it can be salary packaged. Not only can you salary package the cost of the phone itself, but also the ongoing monthly costs.
Say you were on a $110 per month plan ($1,320 per year) and earned $80,000 per year. You could save $510 per year simply by salary packaging your mobile phone.
What Other Items can be Salary Packaged?
There are a number of other items which can be salary packaged, each with various requirements. These will be covered in articles to come.